Held for the First Time in Over 2 Years and 4 Months Since COVID-19
[Asia Economy Reporter Jeong Hyunjin] After more than two years since COVID-19, business leaders gathered in Davos, Switzerland, warned that globalization, which has continued for 30 years, is coming to an end. The World Economic Forum (WEF), held without Russia, a previously active sponsor country, conducted sessions focused on Ukraine, reinforcing the anti-Russian stance of the US and European business communities.
According to Bloomberg and others on the 22nd (local time), the WEF was held in Davos from that day until the 26th, bringing together global business leaders and investors in one place. This Davos forum was held for the first time in about 2 years and 4 months since January 2020 due to the impact of COVID-19.
Major foreign media reported that business leaders and investors, who reappeared after the pandemic, are striving to make important strategic decisions amid ongoing supply chain disruptions caused by COVID-19, geopolitical issues due to the Ukraine war, recent stock market turmoil, and rapidly worsening economic outlooks.
What is especially noteworthy at this meeting is deglobalization. According to market research firm Sentieo, discussions about deglobalization among companies have expanded in recent weeks, and mentions of nearshoring (relocating production bases to neighboring countries), onshoring (attracting production bases of foreign companies domestically), and reshoring (returning overseas enterprises to their home countries) in earnings reports and investor conferences have reached the highest levels since 2005.
Jos? Manuel Barroso, former President of the European Commission and current Chairman of Goldman Sachs International, a Portuguese politician, said, "Tensions between the US and China have worsened due to the pandemic and Russia's invasion of Ukraine," adding, "All these trends are raising serious concerns about the world decoupling."
He noted that onshoring, the return of nationalism, and regionalization have recently become corporate trends, slowing globalization, and added, "Globalization is facing conflicts due to nationalism, protectionism, indigenous protectionism, blind patriotism, and even xenophobia, and it is unclear who will prevail."
Charles Chip Kaye, CEO of global private equity firm Warburg Pincus, said, "Most people have probably never experienced such an environment during their investment careers," adding, "(Geopolitics) had been pushed to the margins of our thinking since the fall of the Berlin Wall, which clearly provided oxygen for global growth." He continued, however, that now geopolitics is front and center in investment decisions and is a strong headwind for asset prices, saying, "(The rise in geopolitical tensions) is not improving the economy but creating friction in the system."
Christoph Weber, CEO of Japanese pharmaceutical company Takeda, emphasized that outsourcing-based globalization for cost reduction is over and that companies' focus has shifted to sustainable forms of globalization. He said, "It is about mitigating supply chain risks," adding, "The globalization that exists in people's minds no longer exists."
Dominique Assoum, CFO of Airbus, said, "If the meaningful productivity gains achieved over decades through globalization are reversed in a short period, it will raise prices and lead to a prolonged recession," adding, "This is why major economies believe they must do everything possible to change the worst-case scenario."
Russia was absent from this Davos forum. Bloomberg reported that since the fall of communism, Russia had been a major partner country of the WEF, supporting it annually with 600,000 Swiss francs (about 800 million KRW) and hosting parties offering vodka and caviar. Bloomberg explained, "At the last meeting held in Davos in 2020, Russian oligarchs ranked third in the number of billionaires," and that the situation changed three days after Russia's invasion of Ukraine when WEF Chairman Klaus Schwab and President Børge Brende condemned it.
This WEF move is expected to bolster Western countries' efforts to pressure Russia. The Ukraine war issue is a major agenda item during the four-day forum, and on the 23rd, Ukrainian President Volodymyr Zelensky is scheduled to deliver a special speech via video. Speeches by Ursula von der Leyen, President of the European Commission, German Chancellor Olaf Scholz, and NATO Secretary-General Jens Stoltenberg are also planned, with expectations of statements pressuring Russia.
© The Asia Business Daily(www.asiae.co.kr). All rights reserved.
